June 2017 – IVA Mortgage Lender update
|IVA Status||Max LTV|
|Running less 3 years||65%|
|Running 3 yrs+|
|Cleared / Settled|
Satisfied 3 yrs+
IVA Mortgage – Although an IVA puts a strain on your credit and your borrowing ability, it does not prevent you from getting a mortgage. Unlike bankruptcy, you can get mortgage or remortgage your home, whether you are in an IVA or have previously been in one. If you want a mortgage with a current IVA perhaps as part of the 4th year settlement -, then please get in touch as they need careful handling to ensure they complete swiftly and successfully.
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Its a pity that what the IVA and debt management companies dont really advertise too much – is the impact of the IVA on your ability to get credit going forwards. Okay they may well mentioned that getting credit will be more difficult, and many people are backed into a corner and have to take out an IVA to save themselves at that time. We have a lot of people when they are applying to us for a Mortgage after they have cleared the IVA, saying they made the wrong decision to go into the IVA and didn’t realise how much impact it would have on them getting a mortgage whilst wither still in the IVA or even several years after the IVA was cleared.
Mortgage interest rates will be slightly higher following an IVA than high st lenders – but then you kind of knew that anyway !
If you have had an IVA (Individual Voluntary Arrangement) in the past or even if you are working through one currently, getting an IVA mortgage deal can be difficult. While you are often able to keep your home, it is often the case that creditors will impose conditions on how some of the equity in your property is to be paid back. If you are still going through an IVA, getting the best remortgage or mortgage deal is in your interest to ensure you are not paying high interest rates.
An IVA mortgage and the rate you can expect to get will depend on how long ago you completed your IVA and the level of deposit that you have available.
- The term is used to refer to; the taking out a remortgage in order to meet the final payment as arranged this is an IVA remortgage.
- It can also mean applying for a mortgage while within an IVA or having had one recently, this is a mortgage with IVA.
Property & the IVA:
In the process of setting up the IVA, some creditors may include a clause that after a set number of years, some of the value in your property will need to be released as a final payment to the creditors.
In this case you are limited on when to remortgage, however, this doesn’t mean you can’t get a good deal, you just need to shop around. Your insolvency company may suggest some lenders, but also approach other lenders for a mortgage quote.
Mortgage with IVA
If applying for a mortgage within an IVA or soon after the insolvency, you will be subject to high interest rates because lenders will consider you a high risk. IVA mortgages also require a higher than normal deposit due to the level of risk.
To avoid paying high interest rates, ideally you should allow as much time as possible between the IVA and a mortgage application, this would allow your credit rating to recover considerably.
The Lender will also take into account other adverse credit such as arrears and County Court Judgements (CCJs). When all the these have been taken into account, the lender will issue an IVA mortgage offer. It’s worth remembering that an IVA mortgage will not be available at the same interest rate as you may have paid for your previous mortgage. In fact, lenders will compensate themselves for the high risk by loading the interest rate by a few percentage points. However, once you have made the required payments on the mortgage at the right time, you may be able to switch to a product with a better interest rate after a few years.
Mortgage post an IVA
Yes, people in an IVA can take out a mortgage. However, there are few points to remember if you are considering taking out a mortgage whilst in an IVA and would like to avoid some of the pitfalls.If applying for a mortgage within an IVA or soon after the insolvency, you will be subject to high interest rates because lenders will consider you a high risk. IVA mortgages also require a higher than normal deposit due to the level of risk.
It is reasonable to assume that people in an IVA don’t have large levels of savings, and therefore putting down a deposit could prove to be extremely difficult, not to mention trying to explain to your insolvency practitioner how you got the money when your IVA is subject to an annual supervision.
This does not mean that it is impossible. It may be that a family member or a friend is able to help by either lending or giving you the deposit
To avoid paying high interest rates, ideally you should allow as much time as possible between the IVA and a mortgage application, this would allow your credit rating to recover quite a bit. We can help you present your case for the new IVA Mortgage to your IVA supervisor — 90% of the cases we submit are agreed to by the supervisors helping you get your deal.